Conventionally, large web search engines have sold advertising space based on keyword-driven search results. For example, Yahoo! conducts auctions for certain keywords, and the highest bidders have their ads placed on pages containing Yahoo! search results, or they obtain preferred placement among the search results, i.e., at the top of the results list.
As web advertising has developed, a number of companies are acquiring large publisher bases from which they can sell advertisements. For instance, Google is signing up publishers into their AdSense ad network. Advertisers pay Google to serve advertisements to participants of the AdSense network. Google then pays some or all of the advertising revenue to the individual publishers. For example, a publisher in the AdSense network may have an article on its website that talks about digital cameras, and Google's AdSense displays digital camera advertisements from advertisers in the AdSense network on that website. Google auctions off the “digital camera” keyword to advertisers in its AdSense network and displays ads from the highest bidders.
However, there are a number of problems with this proprietary ad network model. First, companies that are building ad networks have an inherent conflict of interest because they represent both the publisher and the advertiser. Second, because there are multiple companies that are creating ad networks, advertisers have the burden of managing buys across many ad networks, which results in significant cost and complexity to the advertiser. Third, because publishers are for all practical purposes locked into a single ad network, the advertiser competition is limited, which results in lower return for the publishers. Fourth, the lack of general standards around terms and conditions, and behavioral segmentation is a major obstacle to reaching the full market value of online display advertising. There is also no current standardization across publishers for accepted media types and ad formats. Fifth, smaller publishers currently have very little power individually, even if they serve a hard-to-reach audience. Additionally, ISPs and other owners of large user databases are not realizing the full value of the information they have due to privacy concerns and lack of a proper marketplace.
Additionally, due to the variety of disparate advertising networks facing potential advertisers and publishers alike, the market for advertising becomes fragmented into micro-markets that are not in equilibrium with one another. Thus, determining optimal advertising expenditure can be difficult and subject to guesswork. In addition to the fragmentation of advertising markets introduced by the above-described proprietary, closed advertising networks, expected return on investment for advertising transactions is difficult for participants to determine or calculate, partly because of factors that can never be determined, but also partly because arms length transactions between publishers and advertisers do not take into account all information, or value, that may be available by private or public third party entities about the transactions.
In short, all that a publishing entity knows today about how a set of prospective advertising transactions is likely to perform is provided either by the proprietary, closed advertising network itself (inherently a biased or incomplete view) or by the publishing entity itself. Similarly, all that an advertising entity knows today about how a set of prospective advertising transactions is likely to perform is provided by the network or by the advertising entity itself. Accordingly, transactions today are based on an inherently incomplete view of expected results from entering into them. Hence, an improved online advertising marketplace is desired where third party entities are able to add value to the online advertising marketplace in one form or another, making a more efficient and certain marketplace.
It would be further desirable to enable third party entities to communicate with a federated online advertising environment capable of performing transactions for participants from a variety of disparate advertising networks to store and aggregate value added to the federated environment by potential value add providers to the overall benefit of everyone who participates in the marketplace. In addition, since value may be defined according to different models in the different advertising networks, it would be desirable to aggregate such value according to a standard model, or common representation, so that valuable additions by third party entities across disparate advertising networks can be compared. Such comparisons would allow participants to advertising transactions to make better, more rational decisions about the expected return on investment for advertising dollars based on a collective understanding of additional value added to a federated advertising exchange across different advertising networks by various third party entities.
The above-described deficiencies of current advertising environments are merely intended to provide an overview of some of the problems of today's advertising environments, and are not intended to be exhaustive. Other problems with the state of the art may become further apparent upon review of the description of various non-limiting embodiments of the invention that follows.